Ctrip.com Surges 22% on First Class Earnings Beat

By Ben Levisohn

Excluding share-based compensation charges, adjusted net income for the quarter was RMB 322 million or $52 million, up 41 percent from RMB 228 million in the prior-year quarter. Earnings per ADS were RMB 2.23 or $0.36, compared to RMB 1.56 or $0.24 a year ago.

Total revenues for the quarter increased 28 percent to RMB 1.32 billion or $215.1 million from RMB 1.03 billion in the same quarter last year.

Net revenues grew 28 percent to RMB 1.24 billion or $203 million from RMB 974 million in the prior-year quarter.

On average, analysts polled by Thomson Reuters expected the company to earn $0.17 per share for the quarter on revenues of $190.41 million…

Ctrip also said its third quarter revenue would grow 20% to 25%.

Oppenheimer’s Andy Yeung calls the report a “blow out quarter.” He writes:

While the [online travel agency] market in China remains competitive, CTRP appears to be adapting well to the new normal with strong volume growth and stabilizing margins. We’re raising estimates to reflect its growth momentum and higher margin assumptions and expect investors to react positively to CTRP’s beat-and-raise quarter. We’re raising our price target to $40 from $27.50 on higher estimates and higher market multiples.

Despite slow economic growth in China and reduced business travel, Ctrip has seen improving metrics due to: 1) strong pricing power to obtain low-price allocations from hotels, airlines, and, increasingly, wholesalers, and 2) price competition this year is less severe than the same period last year. Ctrip has also been helped by its nascent cooperation with Qunar, including offering packaged tours on Qunar. We think the company is expanding its market shares by absorbing potential cheap inventory from both suppliers and third parties, a deviation from Ctrip’s previous practices.

Li raised her target price to $38 from $32 but rates the stock a Neutral because of its high valuation of 24 times 2013 earnings.

Stifel’s George Askew and team believe that Ctrip is benefiting from China’s recent discovery of air tarvel. He writes:

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Barron’s veteran Dimitra DeFotis has been blogging about emerging market investing since traveling to India and Turkey. Based in New York, she previously wrote for Barron’s about U.S. equity investing, including cover stories and roundtables on energy themes. Dimitra was among the first digital journalists at the Chicago Tribune and started her career as a police reporter at the Daily Herald in the Chicago suburbs. Dimitra holds degrees from the University of Illinois and Columbia University, where she was a Knight-Bagehot Fellow in the business and journalism schools.